Century 21 Agora Brazil have an active rental and administration team, we set our below out terms and conditions for managing and renting your property in Paraiba.

Terms and conditions.

Property administration.
We will, pay any taxes, condominium fees, utility bills and act as representative for owner in relation to issues with condominium, administrators, constructors, local authorities and utility suppliers etc.

We will keep an updated account of all expenses and incomes including any rental incomes (This service does not include sourcing rentals or management of clients).

Administration charges;

• Apt. / House, Joao Pessoa, R$200.00 / month
• Apt. / House, Paraiba coast, R$350.00 / month
• Land, Paraiba coast, R$100.00 / month / location.  (Size is not considered)

Where 2 or more units are included in the contract, the second and subsequent units will be charged at 50% of the first.  Special rates may be agreed where a single owner has multiple units in the same building.

Requirement; a public power of attorney with limited and time capped authority to deal with matters listed above.

Contract; 12 month renewable.

Rentals.

The property must be suitable to rent and must meet certain criteria of furnishing and equipment depending on which market we agree to offer the property to.

Long term rentals are commission-able at 50% of the first months rent and 10% of subsequent months as an administration of the rental.

Short term rentals are commission-able at 20% with a minimum commission value of R$200.00, this rate reflects the amount of administration and actual work required to administer these types of rentals.

Cleaning and laundry costs are charged at cost.

Current costs;

• Cleaner R$40.00 per rental.
• Laundry R$40-R$50 per rental.

Rental commissions are paid to find clients and administer the rental with entry and exit checks and administration of the security deposit, assistance with resolution of disputes between owner and tenant.  There is no rental guarantee but no commission will be charged if rents are not paid for any reason.

NB. For short term rentals we require the owner to supply, 3 sets of bedlinen, towels etc clearly labeled with the name and number of the property, we can arrange this.

When receiving payment on behalf of a client, we will receive and keep these funds in a separate, client account, we will pay bills as agreed on behalf of clients and will keep client informed at all times of their account, ie. payments received, payments made and balance.  Each client has a private online account within our google docs system, this enables clients to view the account 24/7.

Any disputes are subject to the rules and regulations set out by CRECI the federal body responsible for regulating the real estate industry and ultimately by Brazilian law.  All commissions, rates etc are at or below those recommended or required by CRECI.

From its low around R$2.67 in late February the pound has risen by 9% against the real putting it close to the highs it achieved in September, November and December last year. Prior to that, the last time sterling was above R$2.9 was in January2010. More interestingly, between February and April the real has depreciated by 5% against the Australian dollar and by 6% against the New Zealand dollar. Against the US dollar it is 7% weaker. The real is going down, although the pace of that decline has slowed in April.

Some of that is the result of lower Brazilian interest rates, which have been falling since last summer. In August 2011 the Banco Central do Brasil’s benchmark Selic rate was 12.5%; today it is 9.75%. Brazilian inflation has fallen since then too, from above its 2.5%-6.5% target range to 5.25% now. The overall effect has been to bring down Brazil’s real interest rate (approximately the nominal 9.75% benchmark minus 5.25% inflation) (and an unavoidable pun) down from 5.8% in August to 4.5% today.

However, a 4.5% real annual return is still attractive to investors and the Brazilian authorities remain keen to discourage speculators from buying the real in the hope of making a fast buck. They have been working on their policy of dissuasion for a couple of years, using taxes and other measures to try to persuade investors that they should stay away from the Brazilian real. Their motivation is that an unduly strong Brazilian real spoils the economy: Exporters either have to raise foreign currency prices, thereby becoming uncompetitive, or maintain them at the same level and tolerate a fall in real-denominated revenues. Equally, a strong currency sucks in imports, making it harder for domestic producers to compete.

Recently, the job of the Brazilian finance minister and central bank has been made easier by the drift of investors away from commodity-related “risky” currencies. Even though Brazil’s economy relies more on domestic consumption and the export of manufactured products than it does on commodities themselves, it falls into the same mental bracket as the rand and the Australian and New Zealand dollars. By and large, investor optimism tends to send it higher; if the global going gets tough it struggles.

Nevertheless, the Brazilian authorities are keeping on top of the job. In March finance minister Guido Mantega extended financial taxes to discourage capital inflows and the Banco Central stepped up its efforts to buy US dollars against the real.

The Brazilian economic data have provided little cause for concern over the last couple of weeks. Unemployment ticked up from 5.5% to 5.7% in February but that is a low percentage in northern hemisphere terms. Retail sales were up by 2.6% in January. Brazil’s industrial output rose in February, contrary to the trend in Europe.

But the government is on the real’s case. In mid-April Guido Mantega reminded financial markets that Brazil will continue to take steps to prevent its currency strengthening against the US dollar and hurting manufacturers. Ha also emphasised a co-ordination between central bank and politics that did not exist in President Lula’s day: “Policies are better synchronized than before. It’s no longer a case of one stepping on the gas while the other slams on the brake.

Political will is not always a guarantee of success in matters of commerce. However, it is easier for a country to depress its currency than it is for it to send it higher. That is what Brazil is pitching at and its policy is working at the moment.

If you are earning money in Brazil from renting property, you will need to pay income tax on those earnings.

You can pay monthly or annually we suggest annually as if there are any rebates at the end of the year it is difficult to recoup these as foreigners do not have bank accounts to receive these payments.

You need to fill in an annual tax return and submit it to the authorities and any tax due must be paid.  This process automatically keeps your tax position regular and your CPF up to date.

The tax regulations are a little complex and the monthly limits change, essentially the current regulations allow a monthly income of R$1,566.61 per month, tax free, then income is taxed at 7.5% between R$1,566.61 – R$2,347.85, 15% between R$2,347.85 – R$3,130.51 and at 22% between R$3,130.51 – R$3,911.63 and at 27.5% above R$3,911.63.  There are allowances to reduce the overall tax and then there are allowable deductions at the end of the year.

Brazilian Property Direct clients can take advantage of a professional accountancy service who will;

• Manage the income tax due from rental revenues
• Prepare the relevant forms and submit to the tax authorities
• Pay the tax due (subject to sufficient funds being available in the client account)
• Regularize the clients CPF with the tax authorities.
• Prepare a tax certificate to the client confirming that the tax has been calculated and paid correctly.

The cost per client for 2011/12 is R$450 per client.

For clients who have been earning rental income but have not paid tax in the last five years, we can discuss your individual situation, tax can be paid for these years but be aware that late payment fines and interest may be added.

There are just 16 apartments, all are 3 bedroom, 2 bath, on private lands wholly owned by the condominium, with security, swimming pool and parking plus facilities.

This is a local project designed to appeal to both local and international markets.  Available now as a pre-construction opportunity to international investors.

Recife international airport is one hour away, with daily flights to the USA and Europe.

Local facilities include yacht club, hospital, police, supermarkets, pharmacies, restaurants, bars, taxis, etc.

ITAMARACÁ BEACH
Itamaracá Beach Residence is a small development of just 16 three bedroom apartments, right on the beach. To be built in an open-V shape, allowing maximum views and breezes to all units, there will be just 2 floors, with each apartment occupying one floor. Properties to the front will naturally enjoy better beach views, while those on the lower floor in the middle and to the rear will also have direct access to terraces in the communal gardens at each side. There are eight apartments on each floor, with numbers 01-08 being on the lower level, numbered from the beach. They are not all identical in layout, and sizes do vary with the larger units upstairs at the rear, numbers 15 and 16. The central upper floor units (11-14) will be connected by an external hardwood bridge over the central communal area, which itself is accessed by hardwood stairs. While the development is targeted primarily at Brazilians, as weekend or holiday homes, shrewd overseas investors will want to take advantage of the off-plan (pre-construction) prices, and potential capital appreciation and rental returns. At 73-90 square metres each, these properties will also be suitable for retirement purposes, or as holiday homes. Onsite facilities will include pools, showers, security, communal maintenance and off-road parking (all apartments having one space, apart from 07 & 08, which will have two). Some units will be used by owners, however there is great rental potential. Short term (eg December to March) should return around R$3000 per month, and long term (12 months) about R$2000 per month. Full property and rental management services are available locally. The land is fully owned by the developer, free of any finance, and full planning permission has been granted. As the land is already zoned for building 2 floor residential units, there are no environmental or other issues. This will be a condominium fully owned and organised by the owners, each with a 1/16th share of the whole. Monthly fees are estimated to be around R$200, and includes grounds and pool maintenance, communal electric, and all water bills.

ITAMARACÁ
Itamaracá is a tropical island in NE Brazil, an hour’s drive from Recife International Airport, with a long road bridge connecting it to the mainland. Most of the island comprises protected forests, but on the ocean side are miles of long white sandy beaches, mainly fronted by weekend holiday homes of the elite and wealthy of Recife. With a resident population of some 18,000, the island swells in the summer months and at weekends, as tourists are drawn to the warm, calm sea waters, protected by a reef two miles offshore. Being a small city in its own right, Itamaracá has a hospital, police and ambulance stations, bank, post office, pharmacies, hotels, numerous stores and supermarkets, and dozens of bars and restaurants. With a history dating back almost 500 years, a wide range of delicious seafood caught locally, and covered in fruit trees, you would expect island property prices to be high… but you would be wrong. The existence of two old prisons, one of which was (until recently) semi-open, has caused property prices to drop to levels of twenty years ago. Only now are the prisons in the process of being closed and the prisoners moved to a new facility far away on the mainland, and the island is starting to lose its image of abandonment. Brazilian buyers are returning and foreign investors are keen to snap up properties still for sale at low prices, while the state government is attracting billions of investment into the area all around the island. Prices are rising, but it is still cheaper to buy here than almost anywhere else in NE Brazil. Brazil is on the way up, Itamaracá even more so, and this is a perfect opportunity to invest in a genuine beachfront home on a tropical island in NE Brazil, at unbeatable prices.

Downloads

Itamaraca Article-PD (1)

Final English Project

executive project (1)

Availability & prices;

01, Type a, Level 1, Front facing, 76.4 m2 / 822 sq.ft., 1 car space, R$254,000

02, Type a, Level 1, Front facing, 76.4 m2 / 822 sq.ft., 1 car space, R$254,000

03, Type b, Level 1, middle front, 76.4m2 / 822 sq.ft., 1 car space, R$224,000

04, Type b, Level 1, middle front, 76.4m2 / 822 sq.ft., 1 car space, R$209,000. R

05, Type b, Level 1, middle rear, 76.4m2 / 822 sq.ft., 1 car space, R$209,000

06, Type b, Level 1, middle rear, 76.4m2 / 822 sq.ft., 1 car space, R$209,000. S

07, Type d, Level 1, rear, 72.6 m2 / 782 sq.ft., 2 car spaces, R$189,000. R

08, Type d, Level 1, rear, 72.6 m2 / 782 sq.ft., 2 car spaces, R$189,000

09, Type a, Level 2, Front facing, 76.4 m2 / 822 sq.ft., 1 car space, R$259,000. S

10, Type a, Level 2, Front facing, 76.4 m2 / 822 sq.ft., 1 car space, R$259,000

11, Type c, Level 2, middle front, 76.4m2 / 822 sq.ft., 1 car space, R$229,000

12, Type c, Level 2, middle front, 76.4m2 / 822 sq.ft., 1 car space, R$229,000

13, Type c, Level 2, middle rear, 76.4m2 / 822 sq.ft., 1 car space, R$214,000

14, Type c, Level 2, middle rear, 76.4m2 / 822 sq.ft., 1 car space, R$214,000

15, Type e, Level 2, rear, 89.9m2 / 968 sq.ft., 2 car spaces, R$264,000. R

16, Type e, Level 2, rear, 89.9m2 / 968 sq.ft., 2 car spaces, R$264,000

R = Reserved

S= Sold

This unit is a three bed two bath apartment on the third floor, it has a really nice ocean view from the lounge and bedroom windows, a nice balcony and is fully furnished.

This is priced well below market for a fast sale, no credit available, its a private sale, all document have been pre-confirmed, its ready to go.  Buy today we can rent it tomorrow!

Condo fees are circa R$350 a month.  Rents are circa R$2,500 a month

The level and style of fit out will depend on your use intensions and budget. If you intend to live in the apartment, then it’s more about personal choice than anything, if you intend to rent it out, then you need to consider the rental market, the more it suits the market, the higher rates and occupancies you will get.

Fixed furniture. We classify fixed furniture as items that are fixed to a wall, ie. kitchen cabinets, bedroom wardrobes, bedside tables, bathroom cabinets and decorative wall panels, such as those in a lounge to mount a flat screen TV on.
Other items classed as fixed furniture are; Split type air conditioners, lighting and shower enclosures known as shower boxes and bathroom mirrors and shelves.

Loose furniture, we classify as, everything else and I will cover this is part 2.

The reason we break the fit out down like this is that the fixed items require pre-planning and ordering so that they can be installed at handover or as soon as possible, the loose furniture can be sourced relatively quickly and easily from local suppliers.

Frequently, clients arrive to personally fit out their units and are disappointed because they can not get it done in the time they have budgeted, it is difficult to get the rest of the fit out organised before the installation of the planned furniture. Clients are most welcome to manage the fit out themselves but should pre-order at least the planned furniture part of the fit out.

1. Movies planejados (planned furniture). There are several local and national planned furniture companies, we exclusively recommend a company called Todeshini who are one of the largest national suppliers, they have a showroom / office in Joao Pessoa.
We invite Todeshini to produce an initial portfolio of three projects for your apartment, the three projects will be on three price scales with a simple, medium and more elaborate plan. They use the actual floor plan of you apartment and present computer generated 3d images, like artist impressions, of how your apartment will look with the furniture in place.
   
At this stage you may choose to add, take out items, change colours or configurations and once you are happy with the plan and budget, they will issue a contract detailing the items, delivery and installation and guarantee etc. Once the contract is signed and returned and the funds sent, Todeshini order the furniture which is made and semi pre-assembled in their factory in Sao Paulo, it is then transported to the local warehouse awaiting installation into your apartment.

As the process, from initial project design to delivery to the local warehouse can take 60+ days, we try to get this section of the fit out organised as early as possible.

AirConditioning. Most apartments now are delivered with the installations for split type air conditioning units. A split A/C system is where one or more fan units are located inside the apartment and the condensor unit is installed outside on the roof od balcony. We, on your behalf contract a local specialist company to supply and install appropriate sized A/C units. This can be messy so we recommend that it is done as early as possible in the fit out.

Split type A/C unit

Lighting project. Pre-construction apartments are generally delivered with wires hanging out of the ceiling or with cheap basic light fittings, we, on your behalf, contract a local specialist company to design a lighting plan then supply and install the light fittings. This can be messy so we recommend that it is done as early as possible in the fit out.

Bathroom fittings. The bathroom cabinets are covered in the planned furniture section, in addition to this you generally will need shower enclosures, mirrors and shelves in the bathrooms. We, on your behalf, contract a local specialist company to supply and fit these items.

Glass shower enclosure

Costs. We have established good relationships with our recommended suppliers who provide good products and good prices. When we source, we charge the client 10% of the cost of those items, the discounts that we negotiate will normally save in excess of this cost.

It wasn’t that hard to convince 24 investors, most of them institutions, to commit a total $810.2 million to Brazilian real estate projects in São Paulo and Rio de Janeiro states. With that under their belts, GTIS Partners, a global real estate investment firm, just raised the largest amount of funding by any foreigners buying Brazilian properties.

GTIS Partners in New York City closed its newly created GTIS Brazil Real Estate Fund II on February 24. Many of the investors are the same ones that bought into their first fund, the GTIS Brazil Real Estate Fund I, which managed to raise $510 million in the crisis years of 2008-2009. All told, GTIS has raised around $2.3 billion in private equity capital since its inception in 2005.

As a result, the New Yorkers now run the largest real estate dedicated private equity fund in Brazil.

Josh Pristaw, Senior Managing Director of GTIS said, “Real estate investment opportunities that we are focused on in Brazil are also being driven by many macro drivers in Brazil including the upcoming 2014 World Cup and 2016 Summer Olympics.”

So far, the fund has spent about 30% of those commitments on a warehouse and residential project in São Paulo and one brand new commercial property in Rio de Janeiro (pictured). It’s got about $250 million more worth of projects on the drawing board, and still under negotiations.

“It’s mostly all new construction,” said Tom Shapiro, president and founder of GTIS. “Investors are sold on the cap rate. Plus margins on selling the properties are still very good. You will get more than what you put into Brazilian real estate,” he said. The cap rate, or capitalization rate, is used to estimate an investor’s potential return by dividing the income the property will generate after fixed costs and variable costs by the total value of the property. Shapiro put the cap rate above 16%.

Leases in Brazil are linked to the core inflation index every three years. There is also low vacancy rates in Brazil as the country continues to grow up from its humble days as a poor country. World class cities like São Paulo still don’t have a lot of class A commercial buildings like the U.S., Europe or even Asia. Smaller sections in São Paulo have steel and glass structures, but most of Brazilian buildings are built brick by brick. Companies moving to Brazil, or upgrading, are going to want newer architecture.

GTIS recently acquired a couple of sites located side by side near Rio’s port and will build around 400,000 square feet of new class A office space starting next year. The building is expected to cost around $150 million.

Shapiro’s fund is closed to investors.

Retail investors interested in Brazilian real estate don’t have a lot of products to chose from. Brazilian residential builder Gafisa (GFA) is liquid, and highly volatile. Other residential names like PDG Realty or commercial properties like BR Malls are only listed on the BM&F Bovespa exchange. International real estate mutual funds like Alpine International Real Estate (EGLRX) are heavily weighted towards Brazilian developers and real estate investment trusts but not a pure play Brazil fund.

When a developer sets out to sell a project they will have a target per square foot price in mind, he knows his costs, the local market and economic situation of the potential buyers.
To get the ball rolling, he will offer the first units at a cheaper price and increase the price when a certain percentage of units have been sold. As sales continue he keeps increasing the sales price, over the entire sales period his per square foot price rises and he has achieved his target per square foot price as an average value.
As an example;
Total units 20, each apartment is 500 sq.ft, target per square foot price US$300
To hit target he needs to sell each unit for US$150,000

If he sells the first 5 units at a launch price of US$120,000 5×120=600k
he puts the price up selling the next 5 for US$140,000 5×140=700k
the next five would be sold at a price of US$160,000 5×160=800k
and the final five units would be sold at US$180,000 5×180=900k
the total revenue form all the sales is US$3million divided by 20 units,
average selling price = US$150,000 which was the target value ie. US$300 / sq.ft.

So if you buy in at the beginning of this process, you bought your unit for US$120,000 and you sell it at completion for the then developers price list price of US$180,000 you have made a profit of US$60,000 50%.
This is on average what we would expect our buy to sell clients to make on capital appreciation over a three year build period. And do not forget that you do not need to put all the money in up front, so if you look at it as an ROI calculation the figures are even more appealing.